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SAA's CEO turbulence adds to airline's woes

Johannesburg - Musa Zwane, appointed as SAA’s acting chief executive this week, could soon give up his position because the “process to find a new permanent CEO has been completed”.

Zwane replaced the airline’s human resources director, Thuli Mpshe, who had acted as SAA boss over the past four months.

SAA audit and risk chairperson Yakhe Kwinana told City Press on Friday that a new leader had been identified to take over the helm at the struggling parastatal and would be appointed “any time”.

Kwinana said Mpshe had been returned to her post to deal with a number of serious employee issues, such as a revolt by pilots, who on Monday passed a vote of no confidence in board chairperson Dudu Myeni and the non-executive directors of the board.

Mpshe had taken over from Nico Bezuidenhout, who had led in an acting capacity after former permanent CEO Monwabisi Kalawe resigned after reaching a settlement with the company.

Including Bezuidenhout’s two stints in an acting capacity, SAA has had eight CEOs in six years.

The troubled national carrier saw an implosion of its leadership when chief financial officer Wolf Meyer resigned on Tuesday.

By Friday, SAA had suspended its chief commercial officer, Sylvain Bosc.

Announcing the suspension, SAA said a forensic investigation had confirmed that there was substance to a tip-off suggesting that “Sylvain [Bosc] doctored the numbers for Abu Dhabi to favour the opening of this route and sold SAA out”.

The airline added that Bosc “knowingly misrepresented the board by overestimating the figures without substantiation and ignored network specialist advice”.

When he was contacted after the suspension, Bosc responded in an SMS, saying “I am consulting my lawyer before responding”.

Kwinana said the board had known there was an issue for “several months” when an investigation was launched.

Airbus turbulence

In 2009, SAA ordered 20 aircraft from Airbus, but due to a lack of cash, it only took delivery of 10.

While SAA was contractually bound by the deal, Treasury managed to negotiate another with the aircraft manufacturer enabling SAA to lease the planes from Airbus rather than buying them outright.

However, without Treasury’s say-so, Myeni approached Airbus CEO Fabrice Brégier about using an African leasing company to finance a purchase deal for some of the new A330 aircraft. But Brégier was reportedly furious and demanded an immediate predelivery payment of R1.6 billion.

The news of the revised deal had unleashed a storm of controversy in which Treasury director-general Lungisa Fuzile had threatened to take action against the board of SAA because there was no way the amount could be paid.

But this week, the story changed fundamentally. Kwinana said on Friday that Finance Minister Nhlanhla Nene was now fully behind the deal to buy the five planes outright.

Kwinina said the deal had been “misunderstood” by Treasury, which had resulted in the initial shocked reaction.

“[Minister Nene] said he now understands the deal. The anger around it could have been prevented had it been properly explained.”

Kwinana said the R1.6 billion predelivery payment demanded by Brégier did not actually need to be paid. She said it was “uncalled for because the invoice was issued before it was due”.

Addressing Parliament’s portfolio committee on finance this week, Kwinana said switching the existing Airbus leasing contract into a financing lease using local finance would save R2.6 billion.

The saving would apparently reduce the number of new guarantees the national carrier would need to limp along because it would limit the costs of hedging to cover foreign currency fluctuations.

Kwinina heaped the airline’s significant losses on Meyer and Bosc.

In Parliament, she told MPs Meyer was responsible for wasting money and breaching regulations regarding service providers.

She said a report compiled by EY (previously known as Ernst & Young) consultants showed while R25 billion had been spent on goods and services, no value for money had been generated. In some cases too, the service providers did not even have proper contracts in place.

Meyer told City Press he could not be associated with board decisions any longer.

He said he had tried to leave amicably, but the situation had changed after Myeni unilaterally altered the terms of his resignation, which had been drawn up by his and SAA’s lawyer. The accusation that he had incurred losses for the airline was another issue he was dealing with in consultation with his lawyers.

* This article has been edited following an interim court order on Tuesday 24 November preventing the media from publishing details from a leaked memo dated 6 November 2015 to the SAA board from the acting CEO. It was also amended to reflect that Monwabisi Kalawe had resigned after reaching a settlement with the company.

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